MahaRERA Protection For Homebuyers: From July 1, Developers to Keep Your Money In Designated Bank Accounts
MahaRERA Chairman Ajoy Mehta said these measures are intended to build trust among homebuyers. (File)
Starting July 1, developers in the state will be required to maintain designated bank accounts, as per new guidelines from the Maharashtra Real Estate Regulatory Authority (MahaRERA). The aim is to prevent developers from taking money from homebuyers and depositing it in various accounts, thus ensuring transparency and accountability in financial operations of housing projects.
MahaRERA Chairman Ajoy Mehta said these measures are intended to build trust among homebuyers by legally securing their investments. “By mandating the opening of three bank accounts for each project, MahaRERA aims to enhance financial oversight and reduce delays in project completion, thereby benefiting homebuyers and improving the real estate sector’s credibility,” he said.
Previously, developers often asked homebuyers to make payments into different bank accounts for different purposes, such as flat booking fees or amenities like gymnasiums and swimming pools. The new move will ensure developers can’t claim lack of funds as an excuse for not refunding booking amounts to flat purchasers who wish to exit a project.
THREE ACCOUNTS IN ONE BANK
To discontinue this practice and enforce financial discipline, MahaRERA has now ordered developers to open three accounts within one bank:
- RERA Designated Collection Account: For 100% of the revenue from the flat buyer.
- RERA Designated Separate Account: For 70% of the funds allocated for the project’s land and construction.
- RERA Designated Transaction Account: For the remaining 30% of funds.
These directives follow a consultation process initiated with various stakeholders in mid-March. Projects involving multiple promoters can also open a ‘RERA Designated Master Account’ to consolidate all collections from homebuyers. The guidelines are aligned with Section 4(2)(i)(D) of the Real Estate (Regulation and Development) Act, 2016, which mandates dedicated bank accounts to ensure financial transparency and better transaction monitoring.
Homebuyers’ payments, excluding government taxes and charges, will be fully deposited into the RERA Designated Collection Account. A minimum of 70% of this revenue will then be transferred to the RERA Designated Separate Account for land and construction expenses, while the remaining 30% will to the RERA Designated Transaction Account. This process will be facilitated by banks through auto sweep, and funds from these accounts cannot be withdrawn via traditional means such as cheques or online banking.
HOW IT WILL HELP BUYERS
If a homebuyer cancels his/her registration, he/she will be entitled to a refund of 70% of the amount received from the RERA Designated Separate Account, along with compensation for any losses. The remaining 30% will be refunded from the developer’s RERA Designated Transaction Account.
This streamlined process will reduce the need for homebuyers to lodge complaints and undergo lengthy legal procedures to recover their money. Developers will use the RERA Designated Transaction Account for project-related expenses other than land and construction.
Both the RERA Designated Collection Account and RERA Designated Separate Account are legally protected from government attachment, and banks must ensure no third-party encumbrances are created on these accounts.
Upon project completion, these accounts will cease to be used unless MahaRERA extends the project, and any alterations to the accounts will require MahaRERA’s approval.
To further ensure transparency, developers must disclose any loans taken against the mortgage of land, flats, or the entire project. They must provide details of the financial institution, transaction date, sanctioned amount, withdrawn amount, and remaining balance. The project’s Chartered Accountant must certify the loan details, including the amount used for construction.